I receive a notice of partnerships or alliances between and among companies almost every business day. Unless they are of an unexpected or very strategic nature, I seldom comment on them. Why is that?
I'm reminded of something Mary Poppins said describing what she called "Pie Crust Promises." She said that they're easily made and easily broken. Many of these announcements seem to fall into the category of "Pie Crust Partnerships." That is, a big fanfare is made at the beginning of a relationship to explain its world-shattering nature. Later, the companies quietly go separate ways and little to nothing comes of it. In a few months, few remember it actually happened.
There are really only three approaches companies can used extend the range of products and solutions that they can offer their customers, if one gives that matter any consideration at all. They are:
- Invest in creating the technology. This usually includes hiring staff; adding hardware and software to the company's datacenter; and hiring the necessary staff. Depending upon the complexity of the technology, this process can cost millions and take years to accomplish. While not the quickest way to accomplish the goal, it typically results in technology that integrates well with the company's current offerings, performs reasonably well and actually offers the desired features and functions.
- Invest in a company that created technology that offers features and functions that are somewhat close to the original goal. This approach often means that the tools have already been purchased, the datacenter has already been build, the staff has already been hired and, as an added bonus, a new customer base appears! This often can be accomplished at a lower cost than developing the technology and can be done much more quickly. Often times, however, the key minds that made the technology work, that planned the product strategy or who developed the customer base leave for a number of reasons leaving the acquiring company holding merely a shell of the old company. Some of the reasons that these key staff members or executives leave include: they don't like the culture of the new company, they don't like the policies and procedures of the new company, or, perhaps, they just want to cash out, move to Florida and take up fishing on the beach.
- Form a partnership or alliance with the company or companies that already have the needed technology. This can be accomplished in mere days and actually costs very little. The companies involved often see an increase in their stock value making the executives' holdings much more valuable. Customers can be led to believe that a solution is at hand even though the technology behind the scenes may not be very well integrated or may not work together at all. A simple implementation detail, executives would say. After these issues fully surface, the partnership may break down and all of the lofty promises to the world will be forgotten. I can't remember ever seeing a press release telling the market "the problems were more than we bargained for, so we're leaving."
When you see these announcements, what do you think of them? Do they make you change your implementation plans? Do you just hit the delete button and go onto the next message in your inbox?